A.M. Best Comments on Ratings of American International Group, Inc.

  A.M. Best Comments on Ratings of American International Group, Inc.

Business Wire

OLDWICK, N.J. -- December 11, 2012

A.M. Best Co. has commented that the issuer credit rating of “bbb” of American
International Group, Inc. (AIG) [NYSE: AIG] is unchanged following the
announcement of the U.S. Treasury’s plan to sell its remaining holdings of
AIG’s common equity and AIG’s agreement with an investor group to sell up to a
90% stake in its International Lease Finance Corporation (ILFC) subsidiary. In
addition, the financial strength ratings (FSRs) and the issuer credit ratings
(ICRs) of AIG’s property/casualty subsidiaries also are unchanged by those
announcements, as well as the release of the anticipated loss from Superstorm
Sandy. The outlook for all ratings also remains unchanged.

The sale of the majority interest in ILFC and the UST’s decision to sell its
remaining common interest in AIG mark the completion of AIG’s plan to remove
itself from U.S. Government ownership and refocus its operations on its core
insurance business. A.M. Best’s assessment of AIG’s financial position has, in
recent years, considered the potential calls on the holding company related to
the debt of ILFC. Although this debt was secured by physical assets owned by
ILFC and was without recourse to AIG, the reputational risk to AIG should
timely payments not be made on that debt was considerable. With the sale of a
majority position in ILFC, A.M. Best’s future assessment of AIG will no longer
include a stressed scenario under which AIG would make payments on the ILFC

Since the announcement of AIG’s recapitalization plan in 2011, A.M. Best’s
ratings of AIG have not considered any benefit related to U.S. Government
financial assistance. The eventual sale of the UST’s common equity position in
AIG was anticipated in A.M. Best’s ratings. At this time, A.M. Best’s ratings
of AIG reflect the assessment of its operating insurance companies, with
consideration of the potential calls on liquidity related to the Direct
Investment Book (DIB). Consequently, the reduction of the UST’s ownership
interest does not have an impact on A.M. Best’s ratings of AIG or any of its

At $2 billion pre-tax and $1.3 billion after-tax, the potential net loss that
AIG’s property/casualty subsidiaries will bear as a result of Superstorm Sandy
is material and will have an impact on the companies’ full-year 2012 earnings.
The size of the loss is, however, well within the probable maximum loss (PML)
incorporated in the assessment of the companies’ risk-adjusted capitalization
using Best’s Capital Adequacy Ratio (BCAR). As such, the loss will not have
any immediate effect on the ratings of those companies. AIG’s decision to
infuse capital into the operating companies to partially offset the losses
from Sandy substantially mitigates the impact of those losses on the
companies’ consolidated risk-adjusted capital position.

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Key criteria utilized include: “Catastrophe Analysis in A.M. Best
Ratings”; “Understanding BCAR for Property/Casualty Insurers”; “Insurance
Holding Company and Dent Ratings”; and “Risk Management and the Rating Process
for Insurance Companies.” Best’s Credit Rating Methodology can be found at

Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Jennifer Marshall, 908-439-2200, ext. 5327
Managing Senior Financial Analyst
Andrew F. Colannino, 908-439-2200, ext. 5706
Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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